Robb on Cooperation

Commitment, or involvement?

Posted by Alan Robb on 29 September 2009 | 0 Comments

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Silver Fern Farms reported over 75% support for its plan which involves opening the cooperative to outside capital. It has been hailed by the chief executive as “a clear signal for change”. With all due respect to Silver Fern Farms, I cannot agree that the members of the cooperative have shown great support for the plan or for their cooperative.

The National Business Review reported that only 42.24% of eligible shareholders voted. The majority of eligible voters, it appears, couldn’t be bothered.

Further, not all 20,000 shareholding members were entitled to vote.

Only current suppliers, numbering about 4,500, were eligible with those who had not supplied livestock to SFF since 1 October 2007 disqualified.

Not all North Island suppliers were represented directly in the shareholder base, a legacy of the Richmond takeover.

That raises questions in my mind about the commitment of the board to cooperative principles.

The 2004 takeover of Richmond should have been followed immediately by the integration of those suppliers into the cooperative on the same basis as existing members.

Democracy is a fundamental cooperative principle, and there is no justification for disenfranchising eligible “citizens”.

It’s clear to me that there’s been “involvement” rather than “commitment” at both membership level and board level: if members are free to sell livestock to the cooperative or elsewhere; if members can play off one buyer against another; then their interest is really in short term gain.

If members cannot be bothered to vote in an election affecting the capital structure of their cooperative; if they do not see that investor returns will inevitably be maximized at their expense; then they do not really appreciate the protection that is currently offered by the cooperative they own.

And if a board fails to enfranchise all potential members, and fails to pay out inactive members, it is opening the door to demutualisation.

I suspect that the cooperative will be starved for capital because the members and board are involved in, and not fully committed to, benefitting from the cooperative advantage.●

– from the August/September 2009 Cooperatives News